Introduction

When it comes to goods and services tax (GST), many business owners and individuals often inquire about its applicability to different types of bank accounts, particularly savings and current accounts. This article aims to clarify the requirements and applicability of the GST number to these accounts, ensuring compliance with tax regulations.

What is a GST Number?

A GST number is a unique identifier assigned to businesses and entities registered under the Goods and Services Tax regime. This number is required for businesses engaged in the supply of goods and services to collect and remit GST as per the tax laws. However, it is important to note that the GST number is not directly linked to any bank accounts.

Applicability of GST Number to Current Account

For businesses that are registered under GST, a GST number is necessary for transactions related to their business operations. These operations can often involve payments made through a current account, which is typically used for business transactions. Therefore, if your business is registered under GST, you must provide your GST number for any such transactions.

Applicability of GST Number to Savings Account

On the other hand, a GST number is generally not required for personal savings accounts unless the account is used for business transactions that are subject to GST. This is because savings accounts are primarily designed for personal use and do not involve the sale or purchase of goods or services that would trigger GST obligations.

Exemptions and Services that are GST Exempt

Under the GST regime, certain services are exempt from the tax. For instance, services such as providing deposits, loans, or advances are typically not subject to GST, as long as the consideration is represented by interest or discount, other than those involved in credit card services. Additionally, the inter-se sale or purchase of foreign currency among banks or authorized dealers of foreign exchange is also exempt from GST.

Impact of GST on Personal Savings Accounts

Personal savings accounts are not subject to GST unless they are used for business transactions subject to GST. It's important to note that the interest earned on a savings account is not subjected to GST, as it falls under the category of services that are exempt under the GST laws.

Furthermore, it is worth noting that personal income, including interest earned from savings accounts, above Rs. 10,000 in a financial year, may be subject to income tax, especially if the individual is an income tax assessor. This could apply to salaried income or business profits. The burden of GST, however, is shifted by the business or individual to the purchaser at the time of sale.

Conclusion

In summary, the applicability of GST to savings and current accounts depends on the nature of the transactions. Current accounts are required to have a GST number when used for business transactions, while savings accounts generally do not require a GST number unless used for business activities subject to GST. Understanding these distinctions is crucial for ensuring compliance with tax regulations and avoiding any potential legal issues.